Space Business: The Right Stuff?- Central- Aug. 2003

Tucked away in a southern corner of Cape Canaveral, Space Launch Complex 46 has just gotten a second launch tower. Unremarkable, perhaps, except for the leading contender to put it to use.

Space Exploration Technologies of El Segundo, Calif. -- known as SpaceX -- is planning to use the pad to launch satellites into low orbit for $6 million -- less than a quarter of the current market rate. If the company can pull off five launches a year for a few years, company founder Elon Musk says, heavy launch vehicles will be the next target, followed ultimately by a mission to Mars.

Musk, 31, is paying the $20 million to $40 million in development costs out of his own pocket -- with no taxpayer subsidies or corporate bureaucracy. Musk has the resources: Forbes estimates his worth at about $200 million. The South Africa native founded Zip2.com, which he sold to Compaq for $307 million in 1999. Later, he started PayPal, which eBay bought for $1.5 billion last October.

"There are not a lot of jobs created directly by SpaceX," says E. Keith Witt, director of planning and customer support for the Florida Space Authority. "However, assuming he is successful, this is the beginning of the low-cost access to space we have been talking about for the last 30 years or so. The real value to Florida is the secondary benefits. The low-cost promise of SpaceX is creating a whole new class of commercial customers, whose payloads will be processed and hopefully one day be built in Florida."

The product of the SpaceX effort so far is Falcon, a 68-foot rocket that aims to boost satellites weighing up to 1,250 pounds into space. SpaceX plans to start launching from the cape late next year.

Convinced of the potential, the Florida Space Authority invested $8 million to add a launch tower and is offering it to SpaceX for a fee. It would have cost SpaceX three to four times that to build its own launch complex, and cutting the cost of launches is what Musk's venture is all about.

Universities and small companies that are now priced out of the market may find new opportunities with cheaper access to space. The federal government is also keenly interested in cutting launch costs for the multitude of reconnaissance satellites it flies.

With Musk's track record and the success of the Falcon testing to date, SpaceX has earned its share of fans. Says Witt: "The real dream of SpaceX is to build on the success of the Falcon and to launch a rocket on a low-cost Mars mission from Florida. With the past track record of Elon Musk, this might not be that much of a dream."

IN THE NEWS

Clermont -- City officials have cleared the way for a $22-million, 109-room hotel and conference center to be built by Atlantic Hotel Group near the site of the USA Triathlon National Training Center.

Daytona Beach -- Embry-Riddle Aeronautical University plans to develop a research and development business park along Clyde Morris Boulevard that it hopes will attract high-tech aviation and aerospace companies. The university has already rented hangar space to create a Center for Applied Engineering that will build and test airplane components for private companies. That center will open this fall.

Corbin Motors Daytona Beach, which hoped to build one-person electric vehicles at a plant in Daytona Beach, faces a lawsuit by California's Department of Corporations. According to a report in the Orlando Sentinel, the California agency has accused Corbin Motors of misrepresenting its financial health, selling stock and franchises without registering with the state and misdirecting company assets.

Holly Hill -- Marble Crafters has bought a pair of buildings from Florida East Coast Industries to expand its granite fabrication department. The expansion, a few hundred feet from Marble Crafters' existing five-building campus, will allow the company to add 10 positions.

Maitland -- Milcom Technologies will administer a new Defense Department venture capital fund that is designed to encourage the development of new energy technologies. The $25-million fund works under the name OnPoint Technologies and will focus initially on supporting development of portable power sources and energy-saving devices.

Melbourne -- AirNet Communications (Nasdaq-ANCC) says a customer and a private investment firm have supplied it with $16 million in financing to continue operations. AirNet had been facing delisting from Nasdaq's National Market. The money is being provided by Tecore Wireless Systems and SCP Private Equity Partners.

Harris Corp. (NYSE-HRS) says it landed a battlefield radio contract that could be worth $90 million over the next 10 years.

Mount Dora -- Former owners Steve Torrico and William McDonald announced plans to restart the Mount Dora Doodlebug and Cannonball steam train. One of the trains will be an upscale dining car that will go on 2 1/2-hour, four-course trips; the other will take hourlong journeys along an eight-mile loop. Ticket prices have not been set.

Orlando -- Schwartz Electro-Optics filed for Chapter 11 bankruptcy protection after a key military contract was delayed. The company's military operations, which account for about 80% of its business, are on the auction block. If they are sold, Schwartz will focus on commercial applications for lasers.

Alaska Airlines is adding daily nonstop service between Orlando and Seattle.

Osceola County -- The Wilder Cos. of Boston says it will expand The Loop, its planned shopping and entertainment complex at John Young and Osceola parkways near Hunter's Creek, to 440,000 square feet on 60 acres.

Satellite Beach -- Patrick Air Force Base and CEI Investment Corp. of Dallas have agreed to demolish 300 aging base houses and create Pelican Coast, a $150-million housing development. Pelican Coast will include 1,371 residences, which will be open to both base personnel and civilians and will be annexed into Satellite Beach.

TransportationSPEED LIMIT TESTORLANDO -- The National Highway Administration and the Florida Highway Patrol are launching a pilot program to test variable speed limits on Interstate 4 through downtown Orlando. Speed limits, which will be posted on electronic displays, will vary depending on traffic. Bad weather or congestion will lead to slower speed limits so traffic does not back up as quickly.